The prospect of a resolution to the ongoing US-China trade dispute continues to dim as Beijing issued a strong statement vowing to retaliate against the United States following President Donald Trump’s latest tariff threat.
The Chinese Ministry of Commerce in a statement on Tuesday described the US threat to escalate tariffs as “a mistake on top of a mistake” and warned that “if the US insists on its own way China will fight to the end.”
President Trump had earlier declared plans to impose an additional 50 percent tariff on Chinese imports if Beijing fails to withdraw its retaliatory measures.
The proposed tariff hike would add to the 34 percent duty scheduled to take effect on April 9 and a 20 percent increase implemented earlier this year.
Combined the total tariff load announced for 2025 now stands at 104 percent effectively doubling the cost of importing goods from China into the US.
The Chinese government responded swiftly by ramping up market support efforts by allowing the yuan to weaken past the closely watched 7.20 per dollar threshold to boost export competitiveness.
State-backed funds known as the national team were reported to have bought equities to stabilize local markets while the authorities also pledged new loans and considered frontloading fiscal stimulus to ease pressure on the economy.
The onshore yuan dropped to its lowest level since September 2023 while the offshore yuan hit a two-month low.
The Hang Seng China Enterprises Index jumped as much as 3.7 percent on Tuesday rebounding from its worst daily loss since the global financial crisis.
China’s stance reflects a shift in strategy with policymakers prioritizing economic resilience over short-term negotiations.
Officials are increasingly focused on domestic consumption as a key growth driver with exports under threat from rising tariffs.
Chinese President Xi Jinping has yet to speak with President Trump since the latter returned to the White House marking the longest communication gap between US and Chinese leaders post-inauguration in two decades.
The Chinese embassy in Washington also issued a statement condemning the US threats calling them “not the right way to engage” and accusing the US of acting in selfish interest under the guise of reciprocity.
Embassy spokesman Liu Pengyu said “The US hegemonic move in the name of reciprocity serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America first’ over international rules.”
Michelle Lam Greater China economist at Societe Generale SA said “The rhetoric from China is strong. Without Trump backing down investors may need to prepare for trade decoupling between both countries.”
Despite the tough posture the Chinese Ministry of Commerce noted in its statement that it remains open to dialogue.
However Trump has threatened to terminate all talks with China unless unspecified conditions are met.
China’s trade performance has remained relatively resilient with the data from the General Administration of Customs showing growing exports to other markets which have become more imperative as the US becomes a less dominant destination.
Ding Shuang chief economist for Greater China and North Asia at Standard Chartered noted that the marginal effect of increasing tariffs beyond current levels will be limited.
“Most Chinese exports to the US have already been affected. For goods that are not price sensitive tariffs won’t work no matter how high they go” he said.
In the face of a stalled dialogue and escalating measures, both economies are bracing for extended tension.
Beijing’s strategy now appears focused on internal stabilization while Washington continues its pressure campaign through tariffs.
With no imminent talks scheduled and both sides hardening their positions, the US-China trade war may enter a new and more enduring phase.
